the experience of thailand with ppp projects financing - the experience of thailand... · the...

The Experience of Thailand with PPP Projects Financing

Financing Sources for Public-Private Partnerships (PPPs) 25 November 2015

State Enterprise Policy Office (SEPO) Ministry of Finance

State Enterprise Policy Office, Ministry of Finance, Thailand

227 237 208

174 210

293

227 223

174

180 184 209

138

214

438

371 403

304

2007 2008 2009 2010 2011 2012 2013 2014 2015

Gov't Agency Investment SOE Investment

The Need of Infrastructure Investment in Thailand

Global Competitiveness

Index THA SIN HKG KOR TWN MAS

GCI 31 2 7 26 14 20 Roads 50 6 7 18 12 19 Railroad 74 N/A 3 10 7 12 Port 54 2 4 27 25 19 Air Transport 37 1 3 31 36 19 Financial Market Development

34 2 1 80 18 37

Source: The Global Competitiveness Report 2014-2015

Infrastructure Investment will boost the competitiveness of the country

Total Infrastructure Investment in only Transport Sector approx. 1.91 trillion baht (2015 – 2023)

Government Budget for Investment

SOE Investment

Vs

Billion Baht

Source: State Enterprise Policy Office, Thailand (2015) Bureau of the Budget, Thailand (2015) The Comptroller General’s Department, Thailand (2015) 2


Infrastructure Financing in Thailand

Sources and Limitations

Sources Limitations

Budget Limited to 20% of annual budget or 400,000 MB annually

SOE’s Income

SOE’s Income does not meet its rapid demand of infrastructure investment

Borrowing/Bond/ Debenture

National Debt should not exceed the fiscal sustainability level at 60% of GDP to ensure stability and credibility

SOE Public Offering/ Privatization

Needs mature Industry structure and public understanding

PPP Alternative source for infrastructure investment and increases private participation but may be restricted in certain subsectors

Infrastructure Fund Another solution to invest sustainably despite higher cost of capital and more complexity compared to plain debt financing

Fiscal Sustainability Level

44.9% 48.3%

51.0% 52.5% 53.2% 52.8% 51.8%

7.1% 7.4% 9.1% 9.8% 10.3% 10.5% 10.5%

5.0% 5.1% 6.1% 6.8% 7.3% 7.5% 7.5%

0%

10%

20%

30%

40%

50%

60%

2015 2016 2017 2018 2019 2020 2021

Public Debt/GDP

Interest Payment/GDP

Principle Payment/GDP

Source: Public Debt Management Office, Thailand (2015)

3


Criteria for Financing Decision

High Financially Viable : SOEs

Expressway Airport Electricity Energy

SOE Revenue/ Borrowing

Project Finance

PPPs Infrastructure

Fund

4


Criteria for Financing Decision

Low Financially Viable with High Economic Return : Government

Rapid Transit System Public Health Road System Education

Budget Government Borrowing

PPPs Gov’t Subsidy Co-investment

5


PPP Experience in Transportation Sector

20 transportation projects have been delivered under PPP scheme

Road

• The Second Stage Expressway System and its Extension (Expressway Authority of Thailand )

Railroad

• The MRTA Initial System Project Chaloem Ratchamongkhon Line (Metropolitan Rapid Transit Authority)

• The Ladkrabang Inland Container Depot (State Railway of Thailand)

Water Transport

• The Container Terminal B5 at Laem Chabang Port (Deep-Sea Port) (Port Authority of Thailand)

Air Transport

• The Ground Equipment and Maintenance Facility at Suvarnabhumi Airport

• The Aviation Fuel Pipelines with Hydrant System Project (Airports of Thailand Plc.)

6


Financing Source/Sector

Metropolitan Mass Transit

Provincial Rail Network

Highways /Motorway

Water Transport

Air Transport

Annual Budget Land acquisition

Consultants

Land acquisition

Consultants

Land acquisition

Consultants

Land acquisition Consultants Construction

Government Borrowing

Civil Works

Civil Works Signaling

System

Civil Works

Civil Works (Large Projects)

SOE Revenue & Borrowing

Rolling Stock Signaling

System Rolling Stock

Equipment and tools

Consultants Civil Works Equipment and

tools PPPs Civil Works

Fee collection system

Maintenance

Infrastructure Funds

Rolling Stock

Rolling Stock

Tentative Financing Sources

7

PPP Strategic Plan 2015 - 2019 (2558 – 2562 B.E.)

Education, Public Health

and Science, Technology

and Innovation (4.58%) 19 projects, 72.2 Billion Baht

Project Pipeline (66 Projects)

Water Treatment and Irrigation System (3.90%) 11 projects, 61.4 Billion Baht

Require private sector

investment (Opt-out)

Type of Subsectors Estimated Investment Cost

Approximately

1.41 Trillion Baht

Connectivity and Dependency among Subsectors

• Between projects within the same subsector

• Between projects within subsectors under the same higher level sectors

• Between projects within subsectors under different higher level sectors

Urban Rail Transit System, 44.22%

Toll Roads in Urban Areas

0.93%

Intercity Toll

Roads 26.49%

Logistics Depots 1.64%

High Speed Rail 17.02%

Logistics Ports 9.63%

Common Ticketing System 0.07%

1. Urban Mass Transit System

2. Toll Roads in Urban Areas

3. Logistics Ports

4. High Speed Rail System

5. Telecommunication Network 6. Broadband Internet

Group 2 Encourages participation

and investment from

private sector (Opt-in)

1. Intercity Toll Roads

2. Logistics Depots

3. Common Ticketing System

4. Airport Services

5. Water Treatment Management

6. Irrigation System

7. Waste Management

8. Education Infrastructure

9. Hospitals and Public Healthcare Services

10. Medical Supplies and Equipment

11 Science and Technology Infrastructure

12. Infrastructure related to Digital Economy

13. Convention Centers

14. Accommodations for handicap, elderly,

and poor people

Telecommunication (4.28%)

5 projects, 67.6 Billion Baht

Convention Center (0.17%)

1 project, 2.7 Billion Baht

Accommodations for

handicap, elderly,

and poor people

1 project, N/A Baht

Transportation (874.07%)

29 projects, 1.37 Trillion Baht

Intercity

Urban Areas

Main Purpose : “being the gov’t direction for types of public investments which private participation during 5 years (2015-2019)”

Group 1

Estimated Investment Cost

1.58 Trillion Baht

As of 24 Sep, 2015 8


33.2%

5.0% 20.7%

11.6%

29.5%

28.6%

8.9%

16.1%

46.5%

SponsorInsuranceForeignOther companiesRetail

33.3%

8.4% 42.7%

15.7%

New Financing Sources : Infrastructure Fund

BTSGIF ABPIF

TRUEIF

~ 62,510 MB ~ 6,300 MB

~ 58,080 MB

25%

21%

15%

39%

EGATIF

~ 21,480 MB

9

Thank you

State Enterprise Policy Office (SEPO)

Ministry of Finance, Thailand

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